Digital payments major Paytm made a weak debut in capital markets on Thursday as the stock price of its parent company One97 Communications sold at way below the issue price.
The stock of the Ant Group-backed company was listed 1,955 rupees on the Bombay Stock Exchange, against the issue price of 2,150 rupees, and when the market closed it had slipped to the lower circuit of 1,564 rupees.
When a stock declines to a lower circuit limit, purchases by investors are restricted to only that price or higher.
On the National Stock Exchange, it fared even worse. Paytm debuted at 1,950 rupees, registering a decline of 9.30% against the issue price. During the day, the stock plunged 27.34% to Rs 1,562.
Paytm founder and CEO Vijay Shekhar Sharma was unfazed by the slide and was optimistic. He told the NDTV television channel: “One day’s loss does not represent the whole picture. We have to do a good job in explaining the Paytm business model … this is just the first day. We are growing (in terms of) revenue, we are growing (in terms of) margin. We are expanding and we will continue to expand.”
Using a cricket analogy he added: “It is a multiple Test match series. It’s not over if one or two wickets are lost.”
Earlier in the day, Sharma broke down during the opening ceremony of the share sale in Mumbai. “India is made for stories like that of Paytm. I hope our story can inspire many budding entrepreneurs,” he said.
Brokerage Macquarie had initiated coverage of One97 Communications on market debut day with an ‘underperform’ rating. It said Paytm’s business model lacked focus and direction and was a ‘cash guzzler’. It set a price target of 1,200 rupees, nearly 44% lower than the issue price of 2,150 rupees.
Paytm’s initial public offering of 183 billion rupees was the highest so far in India’s corporate history. It was oversubscribed 1.89 times. This was greater than miner Coal India’s 150 billion rupees initial stock sale offer a decade ago.
Incorporated in 2000, One97 Communications is India’s leading digital ecosystem for consumers and merchants. It offers a range of services, including payment services and financial services.